BAE profits surge 91%
DEFENCE giant BAE Systems, one of the biggest employers in Lancashire, has posted a 91% increase in pre-tax profits to £2.37bn, on the back of strong sales and the weakening pound.
Sales hit £18.5bn for the year to the end of December 2008 – a 17.8% increase on the £15.7bn it made a year earlier, while operating profit grew by 45% to £1.72bn.
BAE said it expected to make additional payments of more than £500m to its pension schemes this year.
The company said the defecit at its pension schemes had soared from £2bn to £4.2bn during 2008 following the collapse in stock market valuations.
The company employs around 12,500 people in the North West – the hub of its aerospace business – at sites at Woodford near Stockport, Chadderton, Salmesbury, Preston and Barrow.
It has a strong order book, worth 20% more than last year at £46.5bn, although £5.9bn of the increase is a result of the weakening pound against the dollar.
BAE said it anticipates “good growth” in 2009, despite a lower level of land vehicle sales than in 2008, and that it would benefit from a number of acquisitions it made throughout 2008.
It added that trading results should continue benefit from the pound’s continued weakness.
But it also said in its statement to the stock market: “BAE Systems is not insulated from the difficult wider economic environment. The group recognises that defence budgets are likely at some stage in the future to come under further pressure and it will continue to apply conservatism to its planning assumptions.”
In August, the munitions business secured a 15-year partnering agreement with growth potential to £3bn from the Ministry of Defence covering the supply of 80% of general munitions used by UK Armed Forces. Under the contract, BAE Systems will invest over £120m in new, highly-automated facilities.
Earlier this month, the BAE Military Air Solutions team based at Warton near Preston was awarded two Ministry of Defence contracts worth a total of £119m to provide additional support to in-service Tornado and Harrier aircraft. The work will be carried out in operational locations around the world.
